What is An NFT? Non-Fungible Tokens Explained
NFTs have been all the rage as of late, new projects popping up with more frequency everyday. So, what are NFTs? NFT stands for Non-Fungible Token, digital assets that have boomed and are paving a new path in the digital world, revolutionizing the crypto space. They represent real world objects such as art, music, videos, etc and can be sold for millions of dollars.
NFTs are making a name for themselves with a reputation for being a popular way to directly connect with fans, buy/sell artwork, and much more. A limited number of these one of a kind digital assets, compared to the infinite number of digital created copies, raises the value of the token, assuming it’s in demand. Their unique identifying codes create scarcity in the market, therefore becoming a lucrative investment. They are typically traded with cryptocurrency using the same underlying encryption as cryptos.
How do NFTs work?
NFTs are supported on the blockchain, typically on Ethereum. Blockchain technology would serve as the backbone of Web 3, the idea that data is decentralized – instead of being stored on central servers owned by one entity, an entire network of computers owned by individuals each holds a copy of the information. These tokens are “minted” which is the creation of objects represented in digital form that can be tangible or intangible.
NFT’s can be held for investments, flipped/sold for profit, with one of the most popular uses being added to one’s collection. Jack Dorsey, CEO of Twitter, sold his first tweet as a NFT for over $2.9 million USD. The winning holder now owns the NFT, signed and verified by the creator. With NFTs only allowing one owner at a time for exclusivity rights, the capability of collecting has now been seen as a status symbol.
The NFT space has allowed creators to supply their works with a direct channel to fans. This type of consumer transaction provides artists with a greater expansive reach and high monetization opportunity through royalties.
The difference between NFTs and cryptocurrency
NFT are non-fungible, while cryptocurrencies are fungible. Cryptocurrencies aim to act as a currency that can be exchanged for one another as well as buying and selling goods; it’s used for the purchase and trade of NFTs.
Cryptocurrencies are equal to one another; one dollar is worth one dollar, one bitcoin is equal to one bitcoin. There are hundreds of cryptocurrencies, some of the major ones being Bitcoin, Ethereum, Solana, and Litecoin. Meanwhile, NFTs each have a digital signature meaning they can’t be exchanged for or equal to one another. They are one of a kind tokens that show ownership and convey rights. However, both NFTs and cryptocurrencies are supported and work on blockchain technology.
Popularity amongst celebrities, athletes, and brands
NFTs are gaining huge popularity, taking the entertainment industry by storm with the liking and favorability of celebrities, athletes, and major brands. Many whom have established their own collection as well as created their own initiatives.
NBA Top Shot has generated more than $500 million USD in sales on game highlights. A few celebrities and athletes with impressive and growing NFT collections are Shawn Yue Man-lok, Justin Bieber, Snoop Dogg, Lionel Messi and Steph Curry.
For example, Hong Kong actor and singer Shawn Yue Man-lok entered the NFT world through a collaboration with Christie’s. His Zombieclub token set a world record at an online auction, securing the top position on OpenSea in under 3 hours.
Justin Bieber has shown his love for the variety of colourful bear illustrations inBetweeners, whereas Snoop Dogg introduced a collection of his own called “A Journey with the Dogg.”
Athletes, Lionel Messi and Steph Curry both have a solid space within the NFT world. Messi launched his NFT collection that depicts iconic moments from his football career and Curry’s collection features digital replicas of his shoe-line showcasing the exact pairs he wore for his on-court feats.
Established brands have also taken a step into collaborations, initiatives and projects. A few of the following: Michael Jordan and his son launched a Solana-based platform to bridge the gap between fans and their favorite athletes. In December 2021, Adidas Originals launched its first NFT drop of digital and physical products, linking up with Bored Ape Yacht Club, GMoney and the team behind Punks Comic for the NFT release. In commemoration of its 200th anniversary, Louis Vuitton created Louis The Game which draws the spotlight to its rich heritage through NFTs and in-game innovations.
The NFT space is still a growing industry, with more improvements and projects to come, however from what we’ve seen, the next digital evolution of Web3 is here and on the rise. Having a good foundation in understanding blockchain technology, NFTs and cryptocurrency can give one a better idea of whether or not an investment is a good idea for you.
It’s important to stay informed and do enough research, as from what has been seen, this new wave of digital evolution may affect the future of digital and brand marketing. Voltage X has a dedicated team of NFT specialists to help you launch your next NFT project, contact us to learn more now.